Singapore’s Second Chance Properties, which started out as a retailer of traditional Malay clothes and gold jewellery, has set its sights on real estate to fuel its next phase of growth.
The company is betting that euro zone sovereign debt problems will spur another global crisis, giving it a chance to pick up about S$250 million worth of properties in the next five years, its chief executive said.
“For our future, we will be focusing mainly on real estate activities … We want to become very big, a billion-dollar company and retail cannot grow as fast as property,” said Mr Mohd Salleh Marican, founder and CEO of Second Chance.
Its acquisitions would help to nearly double its profit from real estate in the same period, up from S$21.2 million for the full year ended June.
“Four to five years down the road, we expect net profits from properties to be S$30-40 million, if our plan goes as planned,” Mr Salleh said.
Second Chance, which has 74 properties worth S$181 million, began buying retail properties as a means to control rents and picked up a slew of assets on the cheap during the 1997/98 Asian financial crisis. Two of its assets are office units and the rest retail shops.
In the next crisis, Mr Salleh said he hopes to buy more office and retail properties, expecting prices for the former to rebound sharply when the economy recovers and the latter to provide stable long-term income.
“During every recession, office properties will drop a lot because it’s highly dependent on economic activity. But when the economy recovers, it will move up very fast too,” Mr Salleh said.
He is also positive on the outlook for the retail sector, as unemployment in Singapore is likely to stay low and without any oversupply issues, occupancy would remain high.
Second Chance, which has a market capitalisation of US$144 million (S$183.5 million), trades at a 12 month forward price-earnings ratio of 19 times, just below the sector median of 19.9 times, according to data from earnings-tracker StarMine, a Thomson Reuters company.
Source : Today – 2 Nov 2011
